Protection of trade secrets strengthened

IP: Equal protection also given to foreign litigants

China's judicial system has made greater efforts in recent years to protect trade secrets, improve the quality of hearings and build a sound business environment for domestic and foreign enterprises, a senior Beijing court official said.

With global trade's rapid growth, trade secrets have become a more important intangible asset for companies and played a bigger role in market competition, said Song Yushui, vice-president of the Beijing Intellectual Property Court.

"It's absolutely necessary to strengthen protection in this regard," she said in an interview with China Daily.

While more countries have become keen on investing in China in recent years because of its dynamic market and endeavors to promote intellectual property-related matters, some Western nations have accused the country of insufficient protection of IP rights, including trade secrets.

However, China has made protection of trade secrets a priority in many areas.

In November 2020, Xi Jinping, general secretary of the Communist Party of China Central Committee, while participating in a group study session of the Political Bureau of the CPC Central Committee, stressed the importance of IP protection.

Laws on IP rights protection should be improved, and cases of infringement must be punished in accordance with the law, he said.

The need to protect trade secrets has been added to China's Civil Code, the Anti-Unfair Competition Law and the Criminal Law as well as a number of judicial interpretations and local regulations. "This demonstrates that China's moves to establish the legal protection of trade secrets have been constantly strengthened," Song said.

Data from the Beijing IP Court, which was established in November 2014, showed it had heard 182 cases regarding trade secrets by the end of last year, of which 136 have been concluded. Foreign litigants were from countries including the United States, Japan, the United Kingdom, India and Germany.

"We've always given equal protection to litigants, no matter where they're from," Song said.

A large number of disputes have emerged in the technology, internet, energy and biomedical sectors. A total of 93 percent of the cases involved workers leaving a company for a rival, she said.

"Quite a few plaintiffs in the lawsuits failed to win support from the court, as they had difficulty in proving that the contents leaked by their former or current employees were valuable and confidential," she explained.

To solve this problem, the court issued a guideline in October 2021, specifying what information can be identified as trade secrets and listing a few examples of acts that can be deemed as infringements.

Wang Zhengzhi, partner at Globe-Law Law Firm, said that the guideline "gives a clearer picture of the scope of trade secrets and clarifies infringement behavior, which had been vague in legal practice."

He also gave a thumbs-up to the English-language version of the guideline, saying it is a helpful guide for overseas litigants unable to read Chinese.

"The guideline helps IP lawyers understand more about trade secrets so they can offer better legal services, and it also specifically tells plaintiffs what evidence needs to be prepared if they believe their trade secrets have been infringed upon," Wang said.

In 2021, the Chinese branch of a German company initiated a lawsuit against one of its employees after learning that the employee, who was preparing to leave the company, had copied a large number of confidential documents and sent them to her private e-mail account.

"The company contacted the former employee several times, trying to persuade her to delete the documents, but failed," said Yang Hua, the company's lawyer and managing partner at Grandall Law Firm (Beijing). "Given that leaking the documents could put the company at great risk, the company turned to a court."

Under the guideline, Yang and her team prepared more than 500 pages of evidence for litigation that detailed the confidentiality of the documents, including how the company made clear the duty of its employees to keep business secrets and measures it has taken to protect them.

The company ultimately won the lawsuit.

Besides the guideline, the court has also established a team that specializes in handling disputes about trade secrets to improve the quality and professionalism of case hearings. The team has undertaken exchanges with other countries to keep them up to date on its work.

Wang, from Globe-Law Law Firm urged the IP court to explain to legislators the difficulties in general legal practice to help formulate a law relating to trade secrets in a timely manner.

He also urged more communication with government departments to help enhance officials' awareness of protecting trade secrets.